S&P Maintains CreditWatch on Australia/NZ Tower Ltd. Group

May 21, 2003

Standard & Poor’s Ratings Services announced that it is maintaining its CreditWatch with negative implications on various Australian and New Zealand subsidiaries of Tower Ltd. “following the profit warning issued by the insurance group today.”

The current ratings on various Tower Ltd. operating subsidiaries in Australia and New Zealand are ‘A-‘, while the ratings on various holding companies and debt issues are’ BBB-/A-3′, said S&P.

“The maintenance of the CreditWatch follows the profit warning issued today, where the group intends to reduce the carrying value of certain group companies by NZ$190 million [US $110.8 million], which will result in a loss for the half year in excess of NZ$180 million [US $105 million],” indicated Michael Vine, credit analyst, Financial Services Ratings.

S&P noted that “The reduced carrying value of certain subsidiaries is the result of a change to the application of accounting standards. However, the group proposes to undertake a substantial capital raising of NZ$200 million [US $116.6 million], which will be used to retire debt. The CreditWatch placement will be resolved in the short term and after the release of the half-year results on May 28, 2003.”

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